UK Property Prices Plummet, But GBP EUR And GBP USD Exchange Rates Trade Slightly Up

Published: Monday, 17 December 2012 10:00 BST - Written by John Cameron

STORY LINK UK Property Prices Plummet, But GBP EUR And GBP USD Exchange Rates Trade Slightly Up

This morning’s Rightmove UK House Price survey showed a monthly drop-off of a whopping 3.3% over the past month in the asking price of British properties – well ahead of analysts’ expectations of a 2.6% dip. The disappointing print has underlined that activity in Britain’s housing sector remains subdued, however Rightmove also announced today that it is anticipating that 2013 will see a slight recovery in this key sector of the UK economy, with an increase in prices of 2% expected.

A forward move for the housing sector has been responsible for pulling Britain’s economy out of previous economic slumps. However, the generalised slowdown following the post-2007 credit crisis appears to be a different animal to the cyclical downturns of previous decades – this one has been specifically caused by a contraction of the global credit market. A 2% uptick in British prices next year is highly unlikely to be enough, on its own at least, to cause Britain’s beleaguered economy to improve.

Although the Pound has registered a slight forward move against both the US Dollar and the euro in early trading today, propelling the GBP USD and GBP EUR exchange rates to 1.2306 and 1.6189 respectively, market participants remain wholly unconvinced by this morning’s UK housing numbers.

Elsewhere, Tokyo’s benchmark Nikkei 225 equities index registered gains of almost 1% during last night’s Asian session. The forward move was elicited by the news that the Liberal Democratic party, led by Shinzo Abe, had won the country’s weekend general election. Abe has held power previously in Japan and his expansionary economic plans for Japan’s economy, which officially re-entered a technical recession last week, have found favour with investors. The ‘risk-on’ trading environment overnight proved to be specific to Japan – Hong Kong and Sydney’s indices both lost ground. London’s FTSE 100 has also opened up in the red, suggesting that the US Dollar may hoover support as the day progresses.

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